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A Nose For News On Matrixx's Zicam

Two days after the FDA ordered Matrixx Initiatives' Zicam off the market the story remains one of the most emailed articles on "The New York Times" website. And the company seems to still be trying to find its corporate crisis footing.

MTXX's CFO, COO and Acting President Bell Hemelt came on CNBC yesterday. Later in the afternoon the company announced it would hold a conference call for analysts and investors today. And then yesterday evening a follow-up email went out saying, "Media are welcome to participate in this call."

But that sentence was followed by this one (the emphasis is theirs): "Questions will not be taken during the call." Then the following was not underlined: "If you submit questions in advance to the contact below, the company will do its best to address those questions during the call."

But apparently that prohibition was directed only at reporters because at the beginning of the call this morning the moderator said that after some prepared remarks, "We will open the call for a Q and A session."

It's pretty common practice for companies to put reporters in what's called "listen-only mode" on conference calls and to take questions only from analysts and maybe some investors.

Some firms do separate conference calls for Wall Street and the media so reporters can also ask questions. I had just never received an email spelling out, with an underline no less, that you can't ask a live question.

On the call Mr. Hemelt repeated many of the assertions he made in Wednesday's CNBC appearance, but he used some stronger language here and there calling the FDA's action "drastic" and "unprecedented" and he accused the news media of having "incorrectly overstated" the FDA's position regarding the alleged connection between Zicam and the loss of or damage to the sense of smell.

Scott Henry at Roth Capital Partners prefaced his question by saying, "In my 12 years covering this industry, I've yet to see such an arbitrary decision at the FDA." Roth makes a market in MTXX.

Hemelt repeated that the company plans to try to meet with the agency saying, "We are hopeful that if we can tell our story to the FDA that perhaps we can get them to change their mind. And that would be the ideal situation. And we are certainly hoping for that outcome, but we are moving ahead as if that may not happen."

Hemelt said that means doing a media blitz including open letters to consumers in major newspapers and communicating through social media outlets like Facebook and Twitter.

But Henry, the analyst, observed leading into in a follow-up question, "I see very little wiggle room," referring to the FDA's position that MTXX needs to go back to square one, do a full-blown study and go through the formal drug approval process. Hemelt said the company can't afford to do that.

Not surprisingly, MTXX pulled its financial guidance and it put out a preliminary estimate of the potential retail cost of as much as $10 million. Hemelt said, "The biggest unknown is the degree to which the sales of our products are maintained."

And he added that the company will work with retailers to replace the nasal Zicam with oral products. "That's our goal is to drive people who are currently using our nasal products to use our oral products," he said. "Otherwise there's gonna be, I think, a lot of sick people this year."

So, I guess you can add the common cold to pandemic flu fears.